Aug 30, 2016Last year, when the RFID Lab examined the state of RFID adoption in the U.S. retail sector, we saw a healthy rise in the adoption rate—from large department store chains to smaller specialty shops, though almost exclusively in the apparel sector. I attributed this to the growing awareness among retailers that RFID is necessary for omnichannel retailing, a service retailers must provide to remain competitive (see Try It—You'll Like It!).
I also predicted the following year's growth would exceed that of the current year. I am happy to report that the RFID Lab's 2016 study supports my prediction. Overall, the RFID adoption rate among U.S. retailers increased a whopping 32 percent from 2015 to 2016 (up from a 23 percent increase the previous year). I believe the accelerating adoption rate continues to be driven by the demand for retailers to offer omnichannel services. Store executives now understand that inventory accuracy is a requirement for omnichannel retailing, and they simply cannot efficiently achieve a high level of inventory accuracy without RFID.
As in past years, the RFID Lab's analysis is based on publicly available information and the lab's work with various retailers. While it's not a scientific study, it does provide a reliable snapshot of both new and existing adopters. For the study, we consider whether a retailer is conducting a proof of concept (PoC) to demonstrate RFID's effectiveness in its environment, a pilot to determine if the RFID application and the resulting benefit can scale, or a deployment, tagging additional categories in more stores.
The 2016 study reveals a pattern of movement expected in a healthy adoption environment. Many are new entrants—the study shows 42 percent growth in retailers conducting PoCs. And many of the retailers that conducted PoCs last year moved to pilots this year (57 percent growth).
The study revealed a relatively small percentage increase in phased deployment (18 percent). This was most likely due to extension of existing pilots or internal considerations regarding when to expand the use of RFID (these discussions often take months, and retailers tend to delay rollouts to coincide with the beginning of a new budget year). While we did see a doubling (100 percent increase) of those at full deployment, it represents just a small number of retailers and should be interpreted accordingly.
While the apparel sector continues to drive adoption, during the past year more retailers began RFID-tagging consumer electronics, sporting goods and other product categories. I expect this will be a growing trend. I also feel confident predicting that the number of new adopters will continue to increase in the coming year—and the move up the adoption curve will continue its current pattern. Given the number of retailers conducting PoCs and pilots, I will be particularly interested in following their progress into the pilot and deployment stages, respectively—and seeing what the lab's 2017 study shows.
Bill Hardgrave is dean of Auburn University's Harbert College of Business and founder of the RFID Lab. He will address other RFID adoption and business case issues in this column. Send your questions to hardgrave@auburn.edu. Follow him on twitter at @bhardgrave.